Financial experts have forecasted the inflation rate and the value of the tenge in Kazakhstan for the year 2025.

Astana. December 17. KAZAKHSTAN TODAY - Analysts from the Association of Financiers of Kazakhstan discussed the main macroeconomic challenges for 2025.

According to the experts' forecast, the most significant risk for Kazakhstan in 2025 may stem from a further decline in raw material prices due to the anticipated increase in shale oil production in the USA and OPEC+'s greater tolerance for current prices (a number of restrictions will expire in the first quarter of 2025). Such a scenario could negatively impact key macroeconomic indicators (economic growth, trade balance, current account, budget and National Fund revenues, national currency exchange rate, inflation), seriously complicating efforts to diversify the economy and improve the well-being of Kazakhstanis.

Against the backdrop of stagnating oil production and lower raw material prices, economic growth this year is expected to be significantly below last year's figure of 5.1% and the target level of 6%. However, the country's GDP this year may exceed 4% (4.1% for January-September) due to growth in trade, communications, transportation, construction, and agriculture (above 6%), supported in part by additional transfers from the National Fund.

Nevertheless, the planned increase in raw material production (up to 97.2 million tons), the implementation of large infrastructure projects, and high budget expenditures (33.5 trillion tenge in 2025) may outweigh the negative effects of low raw material prices and high interest rates. Financial market experts expect GDP growth in 2025 to be 4.4%.

Analysts believe that the tenge exchange rate may end 2024 with a double-digit decline and will remain under pressure in 2025.

After a moderate strengthening (1.7% by the end of 2023), the national currency's exchange rate against the dollar may finish 2024 with a drop of over 10% due to significantly higher domestic demand for foreign currency compared to its supply.

In 2025, the USDKZT exchange rate may rise to 545.2 tenge (+6% compared to the current value). Pressure on the tenge could come from low raw material prices, reduced oil production due to the necessity of complying with the OPEC+ deal, slowing economic growth in major consumers of Kazakh raw materials (China and the EU), increasing imports, including due to the implementation of investment projects, worsening expectations regarding the exchange rate, a complicated geopolitical situation in the region, and a general flight of investors from risk.

According to analysts, the fight against inflation will remain a priority in 2025.

Inflation in Kazakhstan by the end of 2024 may be closer to the upper limit of the updated forecast by the National Bank of Kazakhstan for this year, which is 8-9% (if the monthly CPI is 0.9% in December, the annual figure will be 8.7%).

A weakening exchange rate, expansionary budget policy, reforms in paid services, specific internal economic challenges on the supply side of goods, and heightened inflation expectations will hinder the return of the CPI to the target of 5% over the next 12 months. Financial market analysts expect inflation in December 2025 to reach 9.5%.

Experts note that monetary conditions will remain tight. The base rate is expected to return to its January 2024 level by the end of 2024 (meaning that nearly all the reductions throughout the year were offset by a 100 bps increase in November).

Additionally, high inflationary risks in the economy may necessitate maintaining tight monetary conditions in the country for a longer period: in a year, the base rate is projected to be at 14.25% (-100 bps from the current value).

Thus, the real interest rate in the economy may decrease from the current 6.85% to 4.75%, which will negatively affect the attractiveness of tenge-denominated assets and the exchange rate of the national currency, all else being equal.

According to the AFK, corporate lending may slow down. Higher inflation and base rates could adversely affect the dynamics of new corporate loan issuance and complicate the achievement of the set goal of an annual increase in new loans to entrepreneurs of "at least 20%" in 2025.

In retail lending, the relatively low overall debt (4.4% of GDP for mortgages, 9.8% of GDP for consumer loans), high competition, widespread popularity of installment plans, and significant wage growth (+11.3% year-on-year) will balance factors such as rising prices for goods and services, a slowdown in the influx of new clients (the ratio of borrowers to employed population is 88%), and tightening regulations.